South Korea is preparing a new state endowment fund for long-term investment in cutting-edge and strategic industries. The fund will be launched next year with a budget of at least 20 trillion won or around 14 billion US dollars. Assuming a rate of around Rp12.5 per won, the 20 trillion won fund is equivalent to around Rp250 trillion.
Yonhap, quoted on Friday, July 31, reported that the South Korean Ministry of Finance and Economy said the fund would be formed through a new account under the Korea Investment Corp. This step was taken to take advantage of the global investment network of the state-owned company.
The state's perpetual fund is a state-owned fund that is managed for investment. The results are usually reused for the benefit of the country, not for short-term spending.
This new fund will focus on long-term investments without maturity.
The source of the funds comes from several doors. State-owned financial institutions, including the Korea Development Bank, Export-Import Bank of Korea, and Industrial Bank of Korea, will inject 16 trillion won.
In addition, shares worth about 4 trillion won received as inheritance and grant tax payments will also be included in the fund.
The fund will invest with three principles, namely profitability, stability, and public interest.
"Although the investment period is long, this fund aims to invest in strategic industries that have a large spillover effect and contribute to the country's growth potential," said the South Korean Ministry of Finance.
The investment results from the fund will only be used for reinvestment, government dividends, and transfers to the state treasury.
The South Korean government is targeting the draft law on this perpetual fund to be passed by the National Assembly this year.
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